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 OIG
Advisory Opinion On Selling Below Medicare Fees - An Overview
by Siegfried M. Heller, MT, MBA
During the last few years, large commercial laboratory organizations have been
fined hundreds of millions of dollars for defrauding government
programs. Consequently, health-care providers, especially laboratory
administrators, have become very sensitive to matters of compliance
with the many state and federal regulations.
While the requirements of most rules and regulations are well defined and
documented, the issue of selling laboratory services at fees lower than Medicare
reimbursement rates lacks clear direction from the responsible government agencies.
Statutory provisions authorize the Office of Inspector General of the Department
of Health and Human Services ("OIG") to exclude from Medicare and
Medicaid participation individuals and entities that charge Medicare and Medicaid "substantially
in excess of [the] entity's usual charges" unless the Secretary of Health
and Human Services finds "good cause" for such charges (42 U.S.C. § 1320a-7(b)(6)(A)).
Nevertheless, the practice of selling at rates below those for Medicare and
Medicaid is commonplace in independent laboratory settings and hospital laboratory
outreach programs where competitive pressures result in discounting fees to
physicians or managed care organizations.
Over the last two years, the OIG has issued two documents which offer stricter
interpretations of the anti-kickback statutes and provide better guidance with
respect to laboratory fee discounting in relation to Medicare and Medicaid
rates.
| 1. |
OIG
Advisory Opinion No. 99-13 makes it very clear that there
must never be an improper linkage, or the intent of an improper
linkage, between fee discounts and referrals to federal health-care
programs by the entity to whom the discounts are given. Especially
suspect are discounted fees that are lower than the laboratory's
costs and arrangements that may infer "swapping"
discounts on direct account billing business for non-discounted
Medicare and Medicaid laboratory business. The advisory opinion
also refers to the 1994 Special Fraud Alert that cautions
against a laboratory's offering or giving to a referral source
anything of value for less than fair market value, inferring
that the thing of value may be offered to induce the referral
of business.
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| 2. |
In a letter to
an unknown recipient dated April 26, 2000, and published on the internet,
Kevin G. McAnaney, Chief, Industry Guidance Branch, OIG, stated that Section
1128(b)(6)(A) permitting exclusion of providers billing federal programs "substantially
in excess of the provider's usual charges, is not a blanket prohibition
on discounts to private pay customers," but rather addressed "a
much narrower issue - tiered pricing structures that set one price for
Medicare or Medicaid and a substantially lower price for most other customers." Accordingly,
the prohibition is violated only if "a provider's charge to Medicare
is substantially in excess of its median non-Medicare/Medicaid charge.
In other words, a provider need not even worry about section 1128(b)(6)(A),
unless it is discounting close to half of its non-Medicare/Medicaid business." |
If you'd like to discuss this topic with CLSG, please log onto the web site www.chilab.com.
Further information may also be obtained by calling (800) 860-5454, extension
488.
Siegfried M. Heller, MT, MBA, is a Principal and Senior Consultant with Chi
Laboratory Services Group (CLSG) of Park City Solutions, Inc.
CLSG is a Park City Solutions company offering comprehensive laboratory consulting
services.
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